The Kit Kat owner will take control of 60% of the Chinese business for SGD 2.1bn (£1.1bn).
The Hsu family will own the remaining 40% and the company’s current CEO and chairman Hsu Chen, will continue to lead the company.
Hsu Fu Chi’s portfolio includes sugar confectionery, cereal-based snacks, packaged cakes and the traditional Chinese snack Sachima, which Nestlé says complements its own global portfolio. In 2010, Hsu Fu Chi reported sales of £505.1m.
Nestlé owns the Nescafé, Nan and Maggi brands in China as well as local brands Totole, Haoji and Dasha. It posted sales of £2.1bn in the region in 2010.
It already has 23 factories and two R&D centres in China, where it employs 14,000 people.
Nestlé CEO Paul Bulcke says: “This proposed partnership will greatly reinforce our presence in China. It combines Hsu Fu Chi’s strong brands, its large portfolio of products at affordable price points, its efficient operations and entrepreneurship with our proven innovation and renovation capabilities, supported by our R&D Centres in China.
He adds: “It also demonstrates our long-term commitment to China and enhances our ability to grow our portfolio of international and local brands in this dynamic market.”
Hsu Fu Chi’s CEO and Chairman Hsu Chen says the partnership will “accelerate the development of the Hsu Fu Chi brand” and ensure its “brand legacy for the future”.
The deal is subject to regulatory approval.